Chupa Chups International Business Strategy
S.A. Chupa Chups is a Spanish company, manufacturing and selling sweet products. Founded in 1957 by Enrique Bernat, it has built its empire around one single product: a lollipop. It now has manufacturing plants in five countries, many subsidiaries in distribution, trading, banking, marketing, confectionary machine manufacturing and insurance, and trades in 130 countries around the world.
In a first part, we will look deeper at the company, analysing its resources and capabilities and its core competencies, through a value chain. In the second part, we will see how did the company transfer and manage its competencies abroad in its international expansion.
1. S.A. Chupa Chups’ competitive advantage
1.1. The company
The company was founded on the idea of producing one new product: the lollipop.
û The product
Its particularity is to be on a stick. First made in wood, the stick is now made in plastic through a technologic process developed by the company. This plastic is safer and more resistant than any kind of wood.
û The process technology
Chupa Chups bought a company in the metal-mechanic sector, in order to develop its own process technology. This company, called Confipack, developed the machinery to produce spherical sweets, a “hole puncher” to introduce the stick and the paper wrapping machine. The production then increased to 80 millions of lollipops a year.
û Marketing and distribution
The product has been advertised through radio, television and point of sale publicity. This has been done from the beginning what conferred a really good and known image to the product.
Regarding the distribution system the company developed its own one.
Each sale representative travelled with its own supply of lollipop, executing the sale, delivery and cash settlement at the same time.
This distribution system allowed the rapid expansion of the product within Spain and made the company very successful.
Later in the 1970s the sale and distribution network had grown several hundreds and the company reduced the staff to 8 people. The rest of the sales representatives now work for a wholly owned subsidiary: Chupa Chups Diversificacion, which manage sales in Spain for Chupa Chups own and imported products.
û Human resources aspects
The Executive Committee is composed of three family members and two other senior general managers.
It reported to the Board, composed entirely of family members.
There is no formal Board meeting, which is an advantage of gain of time when quick decisions need to be taken.
The staff of the company is very committed and highly motivated, thanks to:
- Attention on recruiting “talented staff”,
- Salaries above average,
- Employees involved in problem solving, having the confidence of the top.
The employees are very involved in the company and are ready to work hard for it.
Moreover, it is a family owned business, the atmosphere is friendly but energetic and all the personnel shares celebrations.
1.2. Resources and [next page]